Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

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Chavez nationalizes hot iron briquette companies

May 22, 2009

As if he did not have enough on his plate, Hugo Chavez announced yesterday that he will nationalize all of the hot iron briquette companies, including Orinoco Iron and Venprecar, as well as pipe planta Tavsa and Ceramica Carabobo.

Hot iron briquettes are a substitute of steel scrap used worldwide. Essentially, iron ore is processed and produces a more uniform substitute for steel scrap used largely in the automotive industry. Venezuela is one of the main producers of such briquettes. The companies producing these were owned by Venezuelan, Japanese and Argentinean companies. One of them Sivensa, owner of Venprecar and Orinoco Iron, which trades in the Caracas Stock Exchange. Chavez said he would create a large briquette producing company. That seems to be the only plan.

A Venezuelan state owned company, Ferrominera del Orinoco, produces the raw iron ore for the production of briquettes. The Orinoco Iron plant has been plagued with problems since inception, it has never worked up to its full capacity.

Producing and selling briquettes is complex. Prices can gyrate wildly and it is a technically difficult process. Currently, Ferrominera can not supply these companies with all of the iron ore required, forcing some of them to import the raw material.

This is of course another liability for the Chavez Government. Another legal problem. Another future arbitration process in the horizon.

Miguel:
Do you know if local companies can go to international arbitration to get a fair compensation? I thought that their only recourse is to go through the Venezuelan judicial system, and we all know that going through it would be a waste of time and legal fees. Can you shed some light on this?

When I read about this, I cannot help but to think that he is counting with a recovery on oil prices. I do not mean a simple increase in price, but the return the highs that we saw a year ago. Even if there are surely some other reasons (the political- and control-of-the-economy factors are surely the first on the list), I would not discard any expectation on oil prices among the considerations.

I do not doubt that oil prices will recover, eventually. However, the question is “when”, not “if”. Chavez is in a race to see if the recovery comes before, or after, the total collapse of the Venezuelan economy.

The current forecasts predict NO recovery until mid-2010. I suspect that Chavez will simply su8spect all payments to foreign companies for stolen assets, and then refuse to recognize international tribunals. The Chinese will continue to purchase his oil, and foreign courts will probably drag CITGO into court, where Chavez will lose.

Remember the old Chinese curse: “May you live in interesting times”. Things are going to become more injteresting them Venezuela can stand.

None of it matters to Chavez. As long as their is enough money to keep the military happy, he survives. It’s every man for himself. It’s been that way for a long, LONG time. It even predates Castro, er, Chavez.

You will need to see a TOTAL collapse in Venezuela before Chavez leaves the stage. To speed up the process, you should be encouraging him.

Nationalize ALL food, from the farms, to the processors, on to the supermarkets – even the ‘national’ restaurant chains (leave the mom & pops alone).

All pharmacies should be nationalized. ALL communications.

The sooner you suffer this man-made tragedy, the sooner you can move on. Otherwise, the remaining choice is the death by a thousand cuts that I mentioned the other day…see Cuba/Castro, where it’s what, 50 years later?

Want your grandchildren born in a country governed by a dictator? The same dictator your children were born under? Push Chavez to speed up his revolution. Short of civil war or assassination, it’s your only way out.

The stry about the Central Bank selling dollars is a rumor, I fond it hard to believe they will do it, companies would demand as much as they can get and the rate would soar. It would also stop corruption.

That is why we need our border wall finished.
Refrigerated food needs to remain cool at a strictly designated temperature for
the purpose and found out that the nuclear work with fewer competitors in that market as well.